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Business & Stocks Google News Business • Oct 28, 2026

Roll Out Red Carpet for Dollar: Centre Weighs Cutting Capital Gains Tax to Stem Foreign Outflows

💡 Key Takeaways

•Centre is actively reviewing long-term capital gains tax on equities ahead of Budget 2027-28 from the current 12.5%.
•Market expert Shankar Sharma advocated for zero capital gains tax to attract foreign institutional capital and dollar inflows.
•The policy consideration is driven by persistent foreign institutional investor selling and equity market outflows.

NEW DELHI [NCRBuzz Wire] — **MUMBAI [NCRBuzz Wire] — Financial markets and policy circles are closely monitoring potential fiscal shifts as the Centre weighs reducing the long-term capital gains (LTCG) tax on equities from the current 12.5% ahead of the upcoming Union Budget.** This prospective policy review comes in direct response to heavy foreign investor selling and persistent equity outflows that have impacted domestic market capitalizations and currency valuations.

### Fiscal Metrics & Tax Structure Shifts

|---|---|---|---|

**Prominent market expert Shankar Sharma recently amplified calls to roll out the red carpet for foreign capital by advocating for a zero capital gains tax regime.** Market participants note that high tax frictions have incentivized foreign portfolio investors (FPIs) to redirect capital toward more tax-efficient emerging markets.

### Regulatory Stンス & Economic Rationale

**The Ministry of Finance is evaluating these structural tax adjustments to balance revenue generation with capital market stimulus.** Regulatory bodies including the Securities and Exchange Board of India (SEBI) and the Reserve Bank of India (RBI) continue to monitor macroeconomic stability indicators as foreign portfolio liquidation tests domestic market depth.

### Frequently Asked Questions

#### What is long-term capital gains tax on equities in India?

It is a tax levied on profits earned from the sale of equity shares or equity-oriented mutual funds held for more than a specified holding period, currently set at 12.5%.

#### Why is the government considering a cut in capital gains tax?

The policy review is driven by persistent foreign institutional investor selling and capital outflows, prompting authorities to explore tax rationalization to attract foreign capital.

#### What are experts recommending regarding capital gains?

Financial analysts like Shankar Sharma have urged policymakers to eliminate capital gains tax entirely to make Indian equities globally competitive and attract foreign dollar inflows.

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🏛️ Background Context

Changes to capital gains taxation have historically been utilized by the Indian government as a fiscal lever to modulate domestic investment flows, foreign portfolio participation, and capital market stability.

💡 Citizen & Commuter Quick Explainer (FAQ)

Q1: What is the current rate of long-term capital gains tax on equities in India?

The current long-term capital gains tax rate on equities stands at 12.5% following adjustments in recent fiscal budgets.

Q2: Why are experts suggesting a reduction or removal of capital gains tax?

Experts argue that lowering or eliminating capital gains tax will reverse foreign institutional investor selling and attract dollar inflows into Indian equities.

Q3: When is the next fiscal policy announcement regarding capital gains tax expected?

Any potential modifications to the capital gains tax structure are anticipated to be addressed ahead of or during the Union Budget 2027-28 announcements.

Verified Wires: Google News Business, Business Standard, Moneycontrol, The Indian Express Original Wire Dispatch ↗

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